Have you been scammed by E-ZPass? Class action lawsuit wants payback
WOODBRIDGE — New Jersey resident Jennifer Ahmad’s E-ZPass transponder missed a 50-cent toll one day in February and a $1.50 toll on another day. She got hit with a $102 fine.
Roman Wach, of Maryland, missed a 75-cent toll in March. His E-ZPass account was fined an extra 50 bucks.
Yudelka Reynoso, of Pennsylvania, missed three tolls amounting to $9.65 over the course of two days in April. She ended up paying $159.65.
Most people who use E-ZPass might not bother to check their monthly statements.
But forget to update that credit card after it expires and you could be in for a shock.
That’s what happens to tens of thousands of E-ZPass users in New Jersey every year. Now these three customers want a federal court to refund hundreds of millions of dollars to countless drivers who’ve been hit with the $50 administrative fee since 2011, the year the New Jersey Turnpike Authority doubled it.
Their lawsuit seeks class action status, which, If granted, would automatically include all affected E-ZPass users in any settlement.
The allegations also could also result in lawmakers in Trenton investigating how the Authority is managing the 20-year-old E-ZPass system.
The complaint, filed in December in U.S. District Court, says the $50 fee violates both the 8th Amendment’s excessive fines clause and a state law that prohibits profiting off E-ZPass fines.
The Authority, which oversees the E-ZPass system in the state and manages the Turnpike and Garden State Parkway, said in 2011 that it needed to double the fee in order to keep up with rising costs of process violations.
But according to a copy of the lawsuit obtained by New Jersey 101.5, officials may have used inflated and misleading numbers to justify an “exorbitant” fee that the lawsuit describes as an “extortionate money grab,” a “massive theft and a most egregious breach of the public trust, which has resulted in hundreds of millions of dollars in ill gotten gains.”
Does it add up?
The lawsuit says the increased fee is being used to generate money that is funneled to the state. Budget documents show that the Authority had more than $200 million in excess revenue last year.
The lawsuit points to a January 2011 financial analysis that officials generated to justify the increase. The analysis, using 2010 figures, said that it costs the Authority $51.36 to process each violation.
The lawsuit, however, argues that the analysis used numbers based on the previous year’s contract with a third-party company. The following year's contract, however, was $15.75 million cheaper. The analysis also assumed a $50 fee to calculate the third-party company’s contingency fee instead of using the $25 fee in effect at the time. And the analysis divided the costs by the 664,203 violation payments that the Authority collected the previous year, leaving out the millions of violations that went unpaid.
“In other words, NJTA committed itself to the draconian principle that a select few must pay for the sins of many — 664,204 motorists must pick up the slack for the 8,085,796 motorists that pay nothing," the lawsuit argues.
The lawsuit says that dividing the costs of the new contract by the number of collected violations would have generated a $18.37-per-violation cost. Dividing the costs by 10 million annual violations, including those never collected, would have brought the per-violation cost to just $3.41.
In a separate financial analysis prepared in 2011, Finance Manager Lou Polise calculated that the $50 fee would generate a profit of more than $8 million, which the lawsuit says proves that that fee increase was unjustified.
Tom Feeney, a spokesman for the Authority, declined to respond in detail to the lawsuit on Wednesday, saying only that “literally none of these claims is true.”
The proposed class action lawsuit is not the first time the administrative fee was challenged last year.
In May, E-ZPass users James Long and Homer Walker petitioned the Authority in a challenge to the fee that raised the same points the federal lawsuit later did.
In a response to the challenge, the Authority defended the fee as conservative, saying that the true costs of processing each violation is actually double what the Authority charges.
The Authority said its 2011 calculation did not take into account the hidden costs of processing violations, including the maintenance of the toll-collecting infrastructure such as radar, cameras and antennas to read transponders and plates, as well as computers, fiber optic networks, and the employees who do the work.
The Authority also loses money because vast numbers of toll violators never pay. According to budget documents, the Authority lost $19.3 million in uncollected tolls on the Turnpike in 2016 and another $6.5 million on the Parkway. The Authority brought in $1.42 billion and $424.8 million in tolls on each of the highways, respectively.
In its answer to the petition, the Authority said taking all those aspects into account would have brought the cost of processing violations in 2010 to $59.5 million, or $91 per violation.
As a result of reduced collection costs and the number of collected violations increasing to 718,000 last year, the per-violation cost dropped to $80 — still much higher than the $50 fee.
The Authority argued that trying to calculate a fee on a case-by-case basis would be “impractical and unreasonable” because they would not be able to calculate the cost until they tracked down each violator and got them to pay.
The Authority’s decision on the petition is being appealed in Superior Court.
Taking a closer look
Assemblyman John Wisniewski, D-Middlesex, said the issues raised in the lawsuit should be investigated by lawmakers.
“It’s outrageous that the state of New Jersey would be preying on motorists to balance its budget,” the Transportation Committee chairman said Wednesday after learning about the lawsuit from New Jersey 101.5. “I think everybody would agree it was never envisioned or contemplated to be a system that would be a slush fund for state government. That’s what it has become, and that has got to change.”
He said no one has an objection to the collection of tolls to fund the operation of those roadways, “but when that mechanism is used to create a windfall for the state to help plug its budget holes, it creates suspicion and animosity by the public that their hard earned dollars are not being used for their intended purposes.”
Wisniewski said if the Authority is able to generate surplus money, it should consider eliminating the $1 monthly charge on users or lower its administrative fee.
Cathleen Lewis, the director of public affairs and government relations for AAA Northeast, said that fines and fees need to be “fair and reasonable” and that the state should ensure that “monies that are collected for transportation infrastructure stay in transportation infrastructure.”
Lewis added that this underscores the importance of reviewing statements carefully.
“Make sure you’re checking your E-ZPass bills. Make sure to look and see if you have those excessive fees or fines on your bills.”
David Matthau contributed to this report.
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